Data management and provisioning are two of the biggest challenges facing buy-side firms. Front and middle office operations require significant amounts of pricing and security reference data from a number of disparate sources. The individual vendors of those data sources likely have little or no direct experience with a firm’s trading, portfolio management and risk systems or their specific data requirements.  The investment firm is left to align those requirements with the capabilities of each data vendor. Another time consuming challenge involves security resolution i.e., linking identical securities from two different sources.

Many firms have pursued Enterprise Data Management (EDM) systems in an attempt to better manage their securities data. But conventional EDM systems require a significant implementation effort due to a lack of standardization and pre-configuration.  Specifically, firms are left with enormous workloads to establish data mappings, develop interfaces, validate data, and set up data promotion rules.  This work requires highly skilled and knowledgeable staff and continues as interfaces change over time.  As a result, critical security data required by the front office is often lacking, inconsistent, or inaccurate, especially for complex fixed income and derivative instruments.

In addition to managing securities data, firms grapple with providing traders and portfolio managers with current and intraday positions and cash balances. This is especially important for firms that trade around the globe (with regional closes / beginning of days) or firms that don’t receive reliable position files from their back office accounting systems or service providers. Even if positions are properly represented at the beginning of the trading day, the challenge of keeping those positions and cash balances current throughout the day is difficult enough that many firms forgo trying. This leaves portfolio managers working from an incomplete view of their positions that impacts their ability to optimally invest available cash.

If data is incorrect, missing or stale, users can’t realize the full value of their front- and middle-office systems. This results in poor workflow, inefficiency and potential trading errors. In response, vendors of investment management solutions are increasingly adopting a Software-as-a-Service (SaaS) based delivery model, where the solution is integrated with analytics, benchmark and security data, and hosted, upgraded, and maintained by the vendor. This provides buy-side firms with better data, timelier software updates and greater end-user satisfaction. An important part of that overall offering is the provision and management of the rich data set required by the investment platform. Since the vendor has the deepest understanding of their solution’s data requirements they are best positioned to provide and manage that data.

Charles River has addressed these challenges using a four-pronged approach: a comprehensive set of foundational data delivered via the Charles River Data Service, centralized EDM capabilities for data blending and gold copy creation, an Investment Book of Record (IBOR) that provides real-time data on positions and cash, and the Charles River Data Management Service for ensuring a high quality security master both start-of-day and intraday.

Foundational data provides a core set of reference, pricing, benchmark and corporate actions data that can be supplemented with additional specialty data sources needed to support the firm’s mix of investment strategies and products. Security data is then fed to the Charles River IMS for portfolio and risk management, trading and compliance workflows, and corporate actions data is provided to the IBOR to support position and cash management.

EDM capabilities support extensive rule-based data validation and scrubbing to correct issues flagged in the validation. Data blending functionality allows for multiple gold copies to be created based on exactly the sources required for a particular function in the firm’s investment process.

IBOR provides the front and middle office with an accurate, real-time, and consolidated view of positions and cash. As an independent source of start-of-day positions, IBOR decouples the front office from the back office and enables consistent management of position data. This also provides firms with an alternative and complementary approach to outsourcing their back office.

A consistent and accurate security master is essential to a firm’s trading operations. Charles River’s Data Management Service evaluates and resolves data exceptions, including benchmarks, pricing data, and any bespoke analytics. By performing proactive data validation, Charles River’s global data team can identify and rectify issues before they impact front office activities.

Charles River believes that this multi-faceted approach to data provisioning and management positions buy-side clients for success. Our SaaS-based delivery model minimizes operational disruptions and ensures that high quality, fit-for-purpose data is readily available across the front and middle office.

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